French growth seen stable in first half of 2025 at 0.2%, INSEE says #FrenchFinance

PARIS (Reuters) – France is set to see weak but steady economic growth through the first half of next year as a political drama over the 2025 budget weighs on consumers and businesses, the official INSEE statistics agency said on Tuesday.

The euro zone’s second-biggest economy is likely to have stagnated in the final three months of 2024 with a post-Olympics pullback in activity, INSEE said in its economic outlook.

That would leave France with full year 2024 growth of 1.1%, in line with the government’s forecasts and unchanged from last year.

The economy would then eke out growth of 0.2% in both the first and second quarter of 2025, benefitting from a boost to exports from the delivery of an ocean liner in the first three months and then a slight pick-up in consumer spending.

France’s volatile political situation is casting considerable clouds over the economic outlook as the country heads into next year without a new budget after opposition lawmakers voted out the previous government in a dispute over finances.

Temporary legislation rolling over 2024 spending and taxation limits is currently being rushed through parliament to avert a US-style shutdown in January until a more permanent budget can be voted on early in the new year.

“The uncertain political environment is likely to modify the behaviour of economic players, generating a wait-and-see attitude among both households and businesses alike,” INSEE said in its outlook.

INSEE forecast that inflation would pick up from 1.3% in November to 1.5% in January as price increases for some health services and insurance take effect but ease back to 1.0% by mid-year after an expected fall in electricity prices in February.

(Reporting by Leigh Thomas; Editing by Kirsten Donovan)